China Tech has matured in the ecommerce space with the likes of Alibaba and JD.com as capable as anything in America. Amazon is shutting down its 3rd-party marketplace business in China along with the fulfillment centers, after years of massive spending and nothing to show for it. The fact is this: China has since gone post-ecommerce to azcommerce (for anywhere commerce), ahead of whatever new any U.S. firm can provide for competitive advantage. Simply, “Ker Zheng, marketing specialist at Shenzhen-based e-commerce consultancy Azoya, said Amazon had no major competitive advantage in China over its domestic rivals.”
Amazon.com Inc said it will shut its China online store by July 18, as the U.S. e-commerce giant focuses on the lucrative businesses of selling overseas goods and cloud services in the world’s most populous nation.
The move underscores how entrenched, home-grown e-commerce rivals have made it difficult for Amazon’s marketplace to gain traction in China. Consumer research firm iResearch Global said Alibaba Group Holding’s Tmall marketplace and JD.com controlled 82 percent of the Chinese e-commerce market last year.
An Amazon spokeswoman told Reuters on Thursday that it is notifying sellers that it will no longer operate a marketplace, nor provide seller services on Amazon.cn.
Sources familiar with its plans had told Reuters a day before that the company had planned to make such a move.
Nonetheless, consumers will still be able to buy Amazon Web Services cloud services, Amazon devices, and goods from merchants in Amazon’s storefronts in the US and other markets.
Now China is gone, when will Amazon arrive Africa, and improve logistics, with its massive war chest of capital? Expect that before 2022.
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LinkedIn Summary
It is called first mover advantage and category-king market positioning. Once a digital company has assumed those, all the money from amazon cannot easily change the trajectory. Yes, Amazon, the ecommerce firm, exits Chinese marketplace because no one will miss it as JD and Alibaba are in command.
LinkedIn Comments on Feed
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I think it goes beyond first movers advantage – there’s more to doing business in China than first movers advantage – It isn’t that straightforward. The political terrain is complex and Chinese people generally prefer to buy Chinese, even while overseas
My Response: Good point but those things work because the local players have Min Viable Alternatives. Buying Chinese works when there are Chinese alternatives. In Baby food today, foreign brands still rule in most Chinese homes because the local alternatives are not overly trusted. The reason govt plans work is because there are local alternatives. Obasanjo did same on laptop with Omatek and Zinox, MDAS followed until quality issues crashed the party. Simply, give China tech credit
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Some markets are owned, to come later and stand any chance: there must be serious flaw or friction you are coming in to fix, else your entrance is nothing other than ceremonial. Being that Amazon has a lot of money to play around with, it gives it the margins to test these markets, and after some sizable spending spree, you simply shake your head and exit… As for Amazon coming to Africa, the incentives or motivations may not be strong at the moment, but since it has perfected the art of losing money while remaining competitive; it will come in – and then sell other products or services that could shake things up across Africa.
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This article is very informative.